What is planning?
Planning is the process of deciding in detail how to do something before you actually start to do it.
https://www.collinsdictionary.com/dictionary/english/planning
As we enter the new year, it is an opportunity to set new goals and make plans for the upcoming year.
Here are some steps on how businesses should make plans in the new year.
Step 1: Look back at the past year of your business
As you look back, review your business’s performance. Were there are any specific challenges you faced? Did you make a profit? If not, what was the reason? Perhaps, there were insufficient sales to cover your expenses? Were you faced with cash flow problems? If so, reflect on possible reasons why you ran into those problems.
Step 2: Set new goals that you expect to give you a different result
Different results need different goals as well as clear and attainable. Goals must not only be focused on the year ahead but also extend into the following year if needed.
Set economic goals for your business that result in making a profit. For example, a goal to increase revenue by 10% or reduce expenses by 5%. This will drive you and your employees to focus on what matters. There may be other goals, but, your primary goal must be to have a profitable business that has the cash to support its operating expenses.
Step 3: Narrow down the goals to three and prioritise your actions
From all the goals you came up with, you must narrow them down to three to help you and your team focus. Although, you and your team have ideas of how to achieve the most important goals for the year, prioritising these actions and assigning them to individuals encourages accountability and responsibility. As a matter of fact, achieving goals in the business must not be the responsibility of the owner alone, especially when the there are staff employed in the business.
Step 4: Assess your resources against the agreed actions
It is a fruitless exercise if one of your goals is to increase sales for the year, yet, you don’t have a dedicated sales person in the business. Don’t you agree? Assess your resources by asking the hard questions and accept honest answers. Does the business have competent staff to achieve the goals? Are there any training requirements? Does the business have sufficient cash flows to allow for the required investment in growth activities? Does every staff member know what the business processes are and they geared for efficiency?
Step 5: Prepare a 12 month budget and cash flow forecast
Prepare a budget to guide you and your team in terms of what revenue targets need to be met and what expenses are acceptable. Another key point is to prepare a cash flow forecast to help you identify times of cash surpluses and deficits in order for you to ensure that the business is well prepared. A monthly review of the budget and cash flows against actual performance confirms if you are still moving in the right direction.
If you’ve tried planning and realised you need a little bit of help, look no further. Book a call with us here: https://www.santosbiz.co.za/contact/
